Steps to sustainability: APPG for Childcare and Early Education report

The All-Party Parliamentary Group for Childcare and Early Education has called on the Government to address the £662m funding gap in early years education.

A formal inquiry by the cross-party group of MPs and Peers found that recent Government policy decisions have put severe financial strain on non-maintained childcare and early education settings.

The APPG, in its report, Steps to Sustainability, claims that the Government’s flagship 30-hours funded childcare provision for three-and four-year-old children has “exacerbated” financial challenges across the sector, highlighting evidence that suggests there is around a 20% funding shortfall per child per hour. The MPs and Peers also state that settings are struggling with:

  • Rises in business rates, with some facing a doubling of their rates and one seeing a rise from £13000 to £30500 following revaluation in 2017. The report calls for business rates to be scrapped for PVI settings in England, as has already been done in Scotland and Wales.
  • Rises in pension contributions, increases in the national minimum wage and the introduction of the national living wage which have all led to bigger outgoings for providers, yet Government funding for providers has not risen in-line with these changes.
  • Difficulties with the recruitment and retention of staff, with providers experiencing an increase in the movement of staff away from childcare and into other roles, such as retail, due to low pay.

Early education is increasingly understood to be hugely important to a child’s physical and mental development, future life chances, and social mobility. However, the APPG raises concerns that, if the current funding gap is not addressed, it may lead to a significant drop in nursery places in deprived areas compared to more affluent areas due. This, the MPs and Peers claim, means “we risk facing a situation where only wealthy families are able to access childcare services, leading to a reduction in educational opportunities for children as well as more challenges to parents looking to go back into work”.

The APPG demands the Government use the forthcoming Spending Review to provide urgent financial support to address the funding gap, and then takes a series of measures to support the long-term sustainability of the sector.

Tulip Siddiq MP, Chair of the All-Party Parliamentary Group for Childcare and Early Education, 2017-19, said:

 “We know that the early years are hugely important to a child’s physical and mental development and future life chances.

However, there is a significant body of evidence to demonstrate that  childcare providers are battling to achieve and maintain financial sustainability, and that Government policies are a major cause of this challenge.

With the Spending Review just around the corner, and a new Prime Minister soon to enter Downing Street, this report is being published at a critical time. We urge the Government to take on board our recommendations and provide the urgent funding and support needed to successfully, and sustainably, deliver its childcare policies”.

The report has been welcomed by prominent members of the early years sector.

Cheryl Hadland, Founder & MD, Tops Days Nurseries Group said:

“I am delighted that the APPG has produced this positive report, and hopeful that providing top quality childcare and early education will receive the focus that is needed in order to deliver this to all children, the best investment the country can make for its future prosperity”.

Neil Leitch, chief executive of the Early Years Alliance, said:

“This report and its recommendations are the result of a year of hard and serious work by the APPG to understand the early years funding crisis.

“It deserves a considered response. It simply will not be good enough for ministers to respond by trotting out lines about record spending, happy parents, or a lack of will from providers to make things work. It’s time for them to accept that underfunding is causing a crisis of sustainability in the sector that’s putting downward pressure on quality and forcing up parent fees.

“We know already the phrases ministers use to defend their record but no amount of polish can gloss over the dent in their argument. The simple fact is there’s a huge and growing shortfall in early years funding and it’s leaving many providers, especially those in disadvantaged areas, with little option but to close.

“ It’s beyond time ministers got a grip of this situation and recognise that only government can intervene to safeguard the long-term sustainability of the sector by increasing fees and committing to an annual review”.

Purnima Tanuku OBE, chief executive of the National Day Nurseries Association, said:

“We all want to see a successful and resilient early years sector because that is how we get the best possible outcomes for our children. As today’s Steps to Sustainability report shows, the Government’s policies are putting that all at risk.

“This is a comprehensive look at the sector, the challenges being faced and what can be done now to ensure its future sustainability. The report has to be a wake-up call to Ministers, and hopefully the new Prime Minister, that the early years needs urgent attention. The forthcoming spending review presents an opportunity to get this right but there are steps around business rate relief and universal credit that can be addressed straight away to support parents and providers.”

Julie Hyde, Director of CACHE said:

“At CACHE, we see first-hand the impact that access to high quality early years provision has on the development of children and in driving social mobility. Not only is it central to ensuring positive outcomes for individuals, but also the future prosperity of society as a whole. We therefore support colleagues in calling on Government to take immediate action in addressing the drastic funding shortfall and give the sector the support it so vitally needs“.  

Rebecca Swindells of the Foundation Stage Forum said:

“Our members face an ongoing struggle to balance their books, recruit the best staff, maintain their high standards and ensure that the needs of families are met. Without the Government’s proactive understanding of the issues facing providers the future for the PVI is very uncertain. We sincerely hope that the recommendations in today’s report are put into place to ensure the sustainability of the sector”.

Mike Indian